A perfect example of cause and effect…
When sweeping and ill-thought-out actions occur, people notice. And those who hold stock and financial instruments are keen to protect their investments.
As a result the recent sell-offs and volatility of stocks are no surprise. Efforts to use tariffs and mass unrestrained layoffs as weapons has consequences.
Or, as I’ve heard it said: Play Stupid Games, Win Stupid Prizes.
When hotheads capture the government and run amok, there is no telling the damage that can be done. It will likely be far and wide, and recovery will not happen for years. It all raises the most important question for individual investors: What to do?
Perspective
At times like these, it is appropriate to take the long view. I am not an investor who invests for the short term. Growing dividend income is for investors who have patience.
Unknown
In the midst of turmoil, there will be times when unexpected gains occur. Sometimes, enormous gains. As a result, selling off means missing out on “staying in the game.”
Loss
In my view, big losses are in store for those who panic sell. I’d hazard a guess that many of the investors who have recently sold are actually money managers trying to get a one-up on their peers. Since they all get measured against each other, nobody wants to be “worst in class” among a group of mutual find managers.
Not to say that some companies won’t be grievously hurt by tariffs and the subsequent trade war. Some may reduce or even suspend dividends, or otherwise falter. It is too early to understand the full extent of what is happening. But plenty is happening.
It seems more people are now expecting an economic recession. So it is proper to see what we can all do to prepare.
For me, I say:
-If you have debt, pay it off.
-Delay any large purchases.
-Build up savings and emergency funds.
What are you doing to prepare for the ongoing turmoil? Let me know here.
The photo is of early Spring peach blossoms, 2025.
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